EURUSD renews two-week high ahead of US inflation data

Cautious optimism in the market pleases the US Dollar bears to keep the reins for the seventh consecutive day while poking the lowest level marked since late September. Adding to the Greenback’s hardships are mixed comments from Fed officials and the unimpressive FOMC Minutes. Further, easing fears from Israel and more talks between the US and China also allow the market sentiment to improve and cut the USD’s haven appeal ahead of the key US inflation data, represented by the Consumer Price Index (CPI) data.

With this, the EURUSD pair rises to the highest level in two weeks but the downbeat UK data triggers the GBPUSD pair’s retreat from a three-week top. Further, USDJPY struggles for clear directions while USDCHF and NZDUSD print mild losses of late.

Gold Price rises to the highest level since September 27 whereas Crude Oil snaps a two-day losing streak. That said, US stock futures and the Asia-Pacific shares edge higher while tracing mildly bid Wall Street equities.

Even so, BTCUSD and ETHUSD dropped for the fifth consecutive day amid pessimism surrounding the crypto market.

Following are the latest moves of the key assets:

• Brent oil prints the first daily gain in three around $87.00, up 1.0% intraday by the press time.
• Gold price remains mildly bid around $1,880, up 0.30% intraday near the highest level in two weeks.
• USD Index stays defensive at 13-day low of around 105.55 after six-day losing streak.
• Wall Street closed with mild gains and the Asia-Pacific stocks edged higher. Also, equities in Europe and the UK trade with minor gains at the latest.
• BTCUSD and ETHUSD print five-day losing streak to around $26,800 and $1,560 as we write.

Fed Minutes, US PPI failed to impress US Dollar bulls

The receding market fears join doubts about the Fed’s future rate hikes and a pullback in the Treasury bond yields to weigh on the US Dollar.

The global support for Israel and the nation’s fierce response to the Hamas attack joined the Taliban’s rejection of helping the military group to tame the geopolitical woes. On the same line is the New York Times (NYT) news suggesting no intervention from Iran in helping Hamas attack Gaza eased geopolitical fears.

Not only the easing fears, but the increasing optimism about the US-China ties also favored the US Dollar bears and fuelled the EURUSD bulls. That said, US Treasury Secretary Janet Yellen said she plans to meet with PBOC Governor Pan Gongsheng while the two are attending the International Monetary Fund and World Bank annual gathering in Marrakech this week. During the last few weeks, diplomats from the US and China have met multiple times and hence suggest easing Sino-American tension, which in turn helps improve the sentiment and prod the US Dollar’s haven demand.

Talking about the data, the US Producer Price Index (PPI) rose past 1.6% market forecast and 2.0% previous readings to 2.2% YoY while the PPI ex Food & Energy, also known as the Core PPI, increased by 2.7% versus 2.3% expected and 2.5% prior.

On the other hand, the Minutes of the September FOMC meeting signaled that the participants judged that risks had become more two-sided while defending the restrictive monetary policy.

Further, the Federal Reserve (Fed) officials also sounded a bit less hawkish and allowed the US Dollar bears to keep the reins. On Tuesday, Fed Governor Michelle Bowman said that the inflation remains well above the FOMC's 2% target while adding this suggests the policy rate may need to rise further. Moving on, Federal Reserve Governor Christopher Waller mentioned that the Fed can watch and see what happens on rates. Additionally, Federal Reserve Bank of Boston President Susan Collins also said that FOMC is at or near the peak of the rate hike cycle.

Elsewhere, European Central Bank (ECB) Policymaker Klaas Knot said that the policy is in a good place now. On the same line, the ECB Governing Council Member Pablo Hernandez de Cos also said that the Core inflation has turned a corner. Alternatively, Governing Council member Martins Kazaks said that the door on rate hikes cannot be closed. On the same line, ECB policymaker and Croatian National Bank Governor Boris Vujcic said that it’s too soon to declare victory over inflation, waiting for early 2024 data.

Moving on, Reserve Bank of New Zealand Governor Adrian Orr said that the Official Cash Rate (OCR) will need to stay at restrictive levels for the foreseeable future. That said, Japan’s Machinery Orders and PPI for August and September respectively eased and allowed the Tokyo officials to defend the Bank of Japan’s (BoJ) easy-money policy.

On a different page, a multi-month high BTC open interest joins the fears of more delays in the crypto ETF approvals from the US SEC to weigh on the BTCUSD and ETHUSD prices.

• Strong buy: USDCAD
• Strong sell: ETHUSD, GBPUSD, Gold
• Buy: USD Index, Nasdaq, USDJPY
• Sell: DAX, FTSE 100, BTCUSD, AUDUSD, EURUSD

US CPI appears the last hope for Greenback buyers

On Thursday, the market players await this week’s key data, namely the US Consumer Price Index (CPI) for September, especially after the previous day’s mixed Fed Minutes. Forecasts suggest a likely easing in both the CPI and the Core CPI figures for the said month. The same, if matched, will allow the US Dollar bears to keep the reins. However, the previous day’s PPI was firmer and hence any positive CPI data might help the Fed talkers to defend their hawkish bias and help the US Dollar to consolidate recent losses.

May the trading luck be with you!